April 2017

04/29/2017

For the first time, more than half — or 51% — of the record $72.5 billion spent on digital advertising in the U.S. last year was on mobile ads, according to a report conducted by PwC US for the Interactive Advertising Bureau (IAB).

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First reported by The Wall Street Journal, those numbers represent a 77% surge of spending on mobile advertising to $36.6 billion last year, according to the IAB. Digital ad spending in general grew 22% in the U.S. from the previous year.

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David Doty, the IAB’s executive vice president and CMO, told WSJ.

“Brand dollars naturally follow consumers, and you’re starting to see a mobile-first, and sometimes a mobile-only mind-set among marketers.”

A big chunk of that mobile growth was driven by Facebook and Google.

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Other key findings of the report include growth in online video ads, in which spending jumped 53% to $9.1 billion. Mobile video spending grew by 145% year-over-year to nearly $4.2 billion.

Digital audio advertising crossed the $1 billion spending mark for the first time in 2016. Those figures also include ad revenue generated by streaming services and podcasts.

In February, the report found Web audiences using desktops or laptops had dipped by 14.2% compared to the same month a year ago, while mobile audiences were up 2.9%.

Interestingly, the March report from MPA revealed mobile audience decreased by 1.3%, the first report that showed even a slight decline in mobile magazine audience.

An MPA spokesperson said in an email.

“We continue to believe this flattening is due, in large part, to comScore’s methodology change initiated in Jan 2017, as well as an indication this platform is approaching saturation. There are only a handful of magazine brands that have yet to develop their mobile audiences to reportable levels.”

For the second half of 2016, Social media revenue was $9.3 billion. Year-over-year, Social media revenue was up 49% from FY 2015. Social continues its half-year growth trends - increases are reflected in the 54% compound annual growth rate of social from 2012 to 2016. Social’s growth continues to play a key role in the growth of Mobile, as Social is a significant activity on Mobile. Note: We define social media as advertising delivered on social platforms, including social networking and social gaming websites and apps, across all device types, including desktop, laptop, smartphone and tablet.

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The gap between desktop video and Mobile video is quickly closing In FY 16, mobile video revenue was 85% of desktop video revenue.

Total digital video, including mobile and desktop, rose to $9.1 billion in FY 2016, up 53% from $5.9 billion in FY 2015.

Mobile now represents just over half of internet advertising, 50.5% in 2016, up from 34.7% in 2015.

When we reallocate mobile activities to traditional formats, we note that digital video grew more than 50% from the previous year.

Display-related formats grew more than 25% 2016, when mobile revenues are included.

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2016 saw $1.1B in audio advertising revenue

In 2016, revenues from Audio advertising, particularly streaming music services, were significant enough to begin tracking within this report. Below are the FY 2016 revenue figures for desktop and mobile. Beginning in 2017, this category will be tracked for growth on desktop and mobile, with the latter being the clear revenue driver.

04/25/2017

Teens’ entertainment diet is eclectic, particularly compared to other generations when they were teens. Teenage Xers didn't have social media vying for their attention; they just wanted their MTV. As teenagers, Millennials were just being introduced to the concept of DVR and media on-demand, and only the youngest portion of that generation experienced any form of social media during their teen years.

However, today's Gen Z teens have more media choices than ever to feed their entertainment needs with the advent of streaming video services, podcasts, streaming music channels, and social video. The dominant perception is that teens are foregoing traditional media such as TV and favoring new digital options, but, in fact, Gen Z is balancing new and old. They’re adjusting their entertainment diet on the fly to make room for all they want to consume—and they aren’t remotely as concerned about format as networks and advertisers are.

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While Millennials have adopted many new entertainment formats and added them to their consumption patterns, Gen Zs are native users, which contributes to their greater use of them. For example, teens allot nearly 40% of their entertainment diet to social media and streaming video, compared to Millennials, who currently grant a third of their entertainment time to these formats. Conversely, Millennials are more likely to indulge in live and time-shifted TV (which they grew up with), with 22% of their entertainment time being spent with these formats, whereas Zs only spend 14% of their entertainment time with TV. That being said, if you ask a typical teenager if they watch TV, he or she will likely tell you yes, and then immediately note that their favorite “TV show” is a Netflix or Amazon original, as we have found in our qualitative research.

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Gen Zs are format- and provider-agnostic. Teens have a seemingly endless number of options for accessing entertainment—many of which offer comparable experiences and even occasionally the same content or variations of shows—and they’ll choose the one that suits the particular situation in which they find themselves. They don’t mind if their favorite show comes from a streaming service, a traditional TV channel, or even a social media network, such as Snapchat, so long as it’s entertaining and easily accessible whenever and wherever they want to watch. To that point, nearly a third of teens (31%) revealed that they aren’t sure what networks created a lot of the shows they watch.

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As a result, video entertainment providers are having an identity crisis as they try to solve for the future. While Netflix istrying to become HBO before HBO can become Netflix, teen Zs have already decided they don’t care if the entertainment they like comes from Netflix, HBO, a broadcast TV network, or a social media network. MTV is banking onreviving live programming and youth’s persistent passion for music to give kids a reason to tune in, whereas The CW is crafting its own streaming experienceto give young fans the access they want. These entertainment providers are fighting separate battles on two fronts: on one hand, they are trying to create killer content and on the other, they’re trying to increase on-demand access.

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However, few have developed robust, seamless cross-channel strategies that offer killer content and always-on access across the multiple entertainment formats that comprise young consumers’ entertainment diets. What is Netflix’s strategy to develop entertainment for Snapchat? How will MTV’s next generation of live programming coincide with teen’s penchant for watching “reruns” via streaming services?

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For marketers and advertisers that want to win young consumers, the question is how they’ll adapt to meet this latest shift in the entertainment landscape, especially as they have historically been slow to embrace such evolution. As modern entertainment networks are challenged to develop strategies and programming that reflect the new reality of teens’ fluid entertainment diet, this will reveal unique opportunities for marketers and advertisers that they must be ready to embrace, even if the territory is uncharted.

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COMMENTARY:

Gen-Z Instore Shopping

According to new research from retail analytics and omnichannel engagement firm Euclid Analytics, 53 percent of Gen Z shoppers shop in retail stores at least once a week, and the National Retail Federation indicates they hold an estimated $44 billion in buying power, creating a tremendous opportunity for retailers to attract and engage with a new set of customers. The Gen Z population, born between the late 1990s and the mid-2000s, is set to reach 2.6 billion by 2020 and is the first generation to have grown up alongside smart devices, social media networks and fast-changing consumer messaging platforms. As a result, Gen Z shoppers are increasingly motivated by the convenience and personalization found online, forcing retailers to cater to new behaviors and expectations.

The study reveals what retailers should know about the Gen Z shopper versus other generations—and how they can adapt their marketing strategies to engage with this mobile-first shopper.

Key findings include:

Gen Z values the in-store experience: 66 percent of Gen Z still prefer to shop in store because they like to see, hold and try on products before buying and 28 percent of Gen Z shoppers want to engage with store associates while shopping, the most of any generation.

Gen Z visits stores to buy, not browse: Only 47 percent of Gen Z shoppers like to browse stores (tied with Baby Boomers for the lowest compared to Millennials and Gen X) and 31 percent of Gen Z shoppers believe it is hard to find items they are looking for in a physical store (the most of any generation).

Personalization gains focus: 26 percent of Gen Z shoppers expect retailers to offer a more personalized experience based on their shopping habits and preferences, the most of all demographics, versus 22 percent of Millennials, 17 percent of Gen X and 11 percent of Baby Boomers.

Snapchat provides social proof: 44 percent of Gen Z shoppers use Snapchat the most while shopping in a retail store, while only 16 percent of Millennial and 5 percent of Gen X respondents.

Instagram wins for brand discovery: While Gen Z shoppers use Snapchat the most while shopping, they rely mainly on Instagram (45 percent) to find new cool products, followed by Facebook (40 percent).

“Retailers should reach out to Generation Z at this early stage to introduce their brands and forge enduring relationships. Our findings highlight some great opportunities for them to connect with this mobile-first population that’s still very much interested in meaningful in-store experiences. Winning their loyalty will mean getting creative about using mobile and social marketing outreach in their physical stores.”

Gen Z is an important group for advertisers, especially as they comprise a greater portion of that coveted 18 - 35 demographic. Their frustration with digital ads tells marketers across the industry that they need to step up their game. Luckily, advertisers can ensure their ads stay Gen Z-significant by leveraging three key elements in their digital advertising approach: user-generated content, cross-device reach, and relevance.

User-Generated Content:

Gen Zers want to “co-create” with their favorite brands, and there are ways in which technology lets marketers infuse their digital advertising with user-generated content. To start, Gen Zers are hyper-sensitive to manipulation and relate better to real content than manufactured content. That shouldn’t be surprising given that user-generated content drives key social platforms today, where Gen Zers spend their online time. A Facebook video of a skateboard trick or an Instagram picture of the Northern Lights resonates with this generation in a way that manufactured content can’t.

Digital ads that find a way to embrace user-generated content show an appreciation for the “co-creation” Gen Z favors. Brand appreciation is important to this generation, and they’ll quickly move on if they can’t detect it.

Cross-Device Reach:

Gen Z live their lives on multiple channels, across multiple screens and have higher “digital” expectations than any generation before them. Apart from growing up in an advanced digital world, Gen Zers are multi-taskers. They work and play on multiple screens, often at the same time. Just because a teenager’s browsing through Facebook pictures while simultaneously G-chatting a friend, doesn’t mean those actions are happening on the same device. That’s why it’s critical for marketers to have cross-device reach. Without that capability, they risk losing greater visibility. Gen Z expects everything they get on one screen to be available to them on others. Why shouldn’t they? If digital marketers want to cater to this sought-after group, they need to be present with them across every digital touchpoint.

Timeliness + Relevancy:

Growing up in a world of information overload, this generation’s attention is difficult to grab. That’s why all advertising must be highly relevant and personalized. It’s true that earlier generations have found targeted advertising around things that interested and resonated with them to be invasive, even creepy. That is not the case with Gen Z. They expect this approach. Their shorter attention spans are attracted to advertising that personally resonates with them. If an ad doesn’t strike that chord, they’ll immediately move on.

They’ve also grown up in the world of “instant.” Instant transportation, instant delivery, instant payments — that’s why marketers can’t underestimate the power of timeliness. Pushing creative efforts around relevant events in real time is valuable because it capitalizes on conversations that matter most and matter “now” to their audiences.

Ultimately, Gen Z’s a great indicator of what the future of consumer expectations looks like — advertising needs to become more thoughtful. That holds true for the people marketers target and the content they use. When a brand can achieve that, and reach audiences across every digital touchpoint, they will find success with Gen Z, and those who follow.

04/19/2017

On Monday the carmaker's market cap exceeded that of General Motors: $51 billion. This is about $15 billion more than where Tesla was valued for much of 2016. And it's about $7 billion more than Ford.

None of this makes any sense. Tesla's business fundamentals haven't changed substantially since late last year, and its first-quarter deliveries — 25,000 vehicles — set a sales pace for 2017 that will see Tesla produce about only 100,000 cars in 2017, an improvement of 20,000 over 2016.

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One explanation for Tesla's most recent surge could be that short sellers (traders who had bet against Tesla) are finally throwing in the towel and covering their positions. That, by definition, would have them buying the shares.

This does make sense, as Tesla is one of the most heavily shorted stocks on Wall Street, and those short sellers have been suffering lately. The financial-analytics firm S3 Partnersestimates that the shorts have lost $3.2 billion this year.

But given that Tesla was already heavily overvalued based on its core business — building and selling luxury electric cars — and that it has only a few billion dollars of assets to claim, it would be logical for investors to start discounting the value of Tesla's future.

Now that it's on a massive upward trajectory, its first-quarter 2017 earnings loom as an opportunity for a more rational outlook on the company's valuation to take hold and could put new investors at real risk of being flushed out.

An alarming increase

But the manner in which Tesla spikes in the absence of real news and in defiance of the numerous challenges it faces over the next year becomes more alarming as the company's paper value climbs ever higher. Tesla bulls argue that Elon Musk's enterprise will be legitimately bigger than GM's and Ford's in the future because electric transportation will displace gas-powered mobility over the next few decades and Tesla has the best brand and largest head start.

Bears insist that Tesla is a sucker's game and a capital-obliteration scheme. They point to the company's inability to make money a decade into its existence, and to Musk's steady refusal to consolidate the business, preferring to push forward and, for example, launch a mass-market electric car (the Model 3) later this year. Or create an energy-storage business. Or buy the struggling, debt-laden SolarCity for over $2 billion. If the stock indeed represents a claim on future cash flows, they point out that those future cash flows could be zero.

Both angles overlook the company's most glaring problem, which is that Tesla is a carmaker that still isn't very good at making cars. The cars that it does make are impressive (at Business Insider, we've test-driven them all). But Musk expects to be delivering 500,000 vehicles by 2018 and 1 million by 2020 — the former represents a fivefold increase over projected 2017 production, and the latter would require Tesla to either double the capacity of its Fremont factory or build a new plant.

Nonsensical valuation

Viewed in this context, Tesla trading at $311 is flatly insane. Even if it were to sell 1 million vehicles by 2020, most of them would be lower-margin small cars. The most profitable market segments — big SUVs and large pickup trucks — would still be owned by the three Detroit automakers (GM, Ford, Fiat Chrysler Automobiles) that the markets have decided are worth less in the future than Musk's operation.

The situation with Tesla's valuation will probably get worse before it gets rational.

The rally that began early this year occurred after another money-losing fourth quarter. Anyone who is a hardcore Tesla short simply needs to take solace in that Tesla's stock chart has always looked like a roller coaster; shares always go down, typically taking billions in market cap with them. (GM, Ford, and FCA charts, by contrast, look boring.)

A larger question is why Tesla has in the past three months so wildly outperformed even growth-driven stock indexes, such as the Nasdaq. Yes, the markets overall have enjoyed a rally since President Donald Trump won the election. But Tesla has enjoyed a mega-rally — one that's actually out of character with what shares generally do at the beginning of a year, as investors recalibrate their expectations and, if they've owned Tesla for a while, grab some profits.

Beyond trader dynamics — longs versus shorts — Tesla's surge isn't driven by the company's actual performance, and that's exactly what anyone calling a speculative Tesla bubble would latch on to. But that's also old news because Tesla's fundamentals have been analyzed to death, with the obvious conclusion that a $300-plus stock price demands a level of execution that the company hasn't yet reached.

At this point, a Tesla bubble looks obvious, and it looks as obvious as it has since early this year. The difference now is that it's grown so large that it's become terrifying.

COMMENTARY: According to its announcement of January 3, 2017, Tesla (NASDAQ: TSLA) produced 24,882 vehicles in Q4, resulting in total 2016 production of 83,922 vehicles. This was an increase of 64% from 2015.

Tesla delivered approximately 22,200 vehicles in Q4, of which 12,700 were Model S and 9,500 were Model X. When added to the rest of the year, total 2016 deliveries were approximately 76,230. Our Q4 delivery count should be viewed as slightly conservative, as we only count a car as delivered if it is transferred to the customer and all paperwork is correct.

Tesla said the transition to new Autopilot hardware resulted in the company’s vehicle production being “weighted more heavily towards the end of the quarter than we had originally planned.” In total, about 2,750 Tesla vehicles missed being counted as deliveries in the fourth quarter of 2016, which the company ascribes to “last-minute delays in transport or because the customer was unable to physically take delivery.”

Tesla said that even though those sales were counted toward 2016, the deliveries were not because the customers did not physically take possession of their cars. Tesla says about 6,450 vehicles are still in transit, and that their deliveries will be counted toward the first quarter of 2017.

The company said.

“We were ultimately able to recover and hit our production goal, but the delay in production resulted in challenges that impacted quarterly deliveries, including, among other things, cars missing shipping cutoffs for Europe and Asia. Although we tried to recover these deliveries and expedite others by the end of the quarter, time ran out before we could deliver all customer cars.”

While it fell short on delivery, Tesla was able to beat its production rate for 2015. Tesla said it produced 24,882 vehicles in the fourth quarter of 2016, resulting in a total of 83,922 vehicles produced in 2016. This was an increase of 64 percent from 2015.

Vehicle demand in Q4 was particularly strong, Tesla says. Net orders for Model S and X, which were an all-time record, were 52 percent higher than Q4 2015 and 24 percent higher than the company’s previous record quarter in Q3 2016.

Early last month, Tesla announced that it will begin charging owners who leave their cars at Supercharger stations after they have completed charging. The new fee is an attempt to increase turnover at the charging stations, which have become increasingly congested as more Teslas are sold.

Tesla Lithium-ion Battery Gigafactory

Deep in the Nevada hinterlands, under the scorching desert sun, Elon Musk is quietly building a $5 billion, 5.8 million square-foot battery plant that will forever change the auto industry.

Now, most of the attention Tesla receives has to do with its cars. And perhaps justifiably so. Just last week, Motor Trend announced that Tesla's Model S P100D can go from 0-60 MPH in a record-breaking 2.2755 seconds. (That level of torque puts Tesla on par with Ferrari, by the way.)

But the major focus should not be the actual vehicles Tesla is producing. Rather, it's about something much bigger, and, in my view, infinitely more important for Tesla's long-term success: The Gigafactory.

In partnership with Panasonic, Tesla's Gigafactory is building lithium-ion batteries - the same type of battery that's been popular for use with personal electronics but deemed too expensive for electric cars. The Gigafactory is changing that.

As of January 2017, Tesla has begun mass production of the cells, and by 2018, the Gigafactory will "reach full capacity and produce more lithium ion batteries annually than were produced worldwide in 2013," the company says. The facility will be staffed by 6,500 full-time Reno-based employees and "single-handedly double the world's production capacity for lithium-ion batteries," according to Bloomberg.

The company also plans to be producing one million electric cars by the end of the decade.

Now, let's take a step back. Why is the Gigafactory such a big deal, you ask?

Well, two main reasons: Cost and storage.

Batteries for electric vehicles are historically not very cheap, nor do they hold a very good charge. But Musk wants to change that. Specifically, he wants to drive down the per kilowatt hour (kWh) price of the battery pack by more than 30 percent to make it suitable for electric cars, while increasing the amount of energy storage in the battery pack. Must sai at a January 2017 event.

"It really comes from the first principles of physics and economics. That's the way we try to analyze everything."

As stated in a January 2017 investor presentation, Musk announced that the drivetrain for Tesla's much-anticipated $35,000 Model 3 will be built at the Gigafactory 1 in order to vertically integrate the battery production with car production. In a subsequent Q&A session, Musk "compared the concept of the Gigafactory's vertical integration to Ford's effort 100 years ago at River Rouge Complex, the largest integrated factory in the world at the time," Electrek noted.

The big question for investors, however, is whether or not the Gigafactory will pay off in the long-term.

My belief is that yes, it will.

Let me explain.

The Gigafactory Will Push Tesla's Cars Costs Down And Increase Demand For EVs

There's a whole host of reasons why electric cars are the future (fewer greenhouse gases, unstable oil price, a smaller amount of serviceable components, etc.) but the purpose of this article isn't to prove why electric cars are the future. That's just the reality.

By 2040, about 23 years from now, analysts at Bloomberg predict that electric cars will account for 35 percent of all new vehicle sales. Some have even rosier predictions for the EV market: The Argonne National Laboratory predicts that electric cars will make up 58% of the light vehicle market by 2030.

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Right now, what's holding back the sale of EV cars is battery cost and quality.

By owning the production of low-cost batteries with the Gigafactory, the thinking goes, Tesla will establish itself as the king electric vehicle automaker in the long run.

It should be noted, too, that Tesla already has an enormous position on the incumbents in the market, meaning that when the factory is fully up-and-running, they will be best-positioned to target consumers interested in electric vehicles.

Best-selling all-electric cars in 2016

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Tesla is forgoing short-term profits to invest $5 billion into a battery factory (a decision some in the market have criticized) the long-term rewards are well-worth it.

"The cost of batteries is so critical in all this that it justifies (Tesla) having this control. No one else is going to push as hard as they want to bring down the cost of batteries, and to push the market as fast as they need it to go."

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The Gigafactory is Opening To Europe - Taking Tesla With It

In November 2016, Tesla announced that they'll be building Gigafactory 2 in Europe.

Since then, plenty of country officials have thrown their hat in the ring, practically begging Musk to choose them. The Dutch Minister of Finance, for instance, officially expressed his country's interest, while Cyprus began a social media campaign to attract Musk. Portugal, however, is perhaps the most gung-ho about the Gigafactory. As DW reported:

"Euphoria has nevertheless gripped many Portuguese over a possible Tesla investment. There's even a Facebook group called 'Bring Tesla Gigafactory to Portugal.' It has only been online since mid-November, but just one month later, it already has nearly 70,000 members. Whether that will help sway Elon Musk as he considers his options for siting Europe's first Gigafactory remains to be seen. It's expected that he will make the siting decision sometime in 2017."

Tesla Stock Bubble

I haven't tracked Tesla shares since late last year, so was very surprised to discover that the shares had increased +104.99 or +53.43% since mid-October 2016. However, the bad news is that Tesla's share price has risen because short sellers have had to buy shares t o minimize their losses. This is a type of "forced demand" that has, for lack of a better word, "artificially drivenup" the price of Tesla Shares, and the increase has been so significant, that retail buyers and speculators have come in and drivenup the price even more. The result is a price per share that is not inline with its financial performance. Tesla's CAP is now higher than General Motors, which is ridiculous since they are both in the same market category. If you are going to invest in Tesla, you must realize that Elon Musk is a high risk taker, who gambles big. Tesla is bigger than fancy electric cars with the latest technology, but about a far bigger mission -- insuring the health of our planet and reducing greenhouse gases. It is a race against time, and this requires rolling the dice. Musk has done this with Space-X, Solar City and Tesla. Forget shortterm profits and look at the bigger picture If investors believe in the bigger picture and true mission for Tesla, then maybe, just maybe, the current valuation is justified on the basis of future potential and not current unit sales of electric cars. If they can grasp the true vision that Elon Musk has for Tesla, then things will sort themselves out. Sure, there may be stock price adjustments, every public company has them, but I truly believe in Tesla's future potential.

04/08/2017

Harris Poll Study Commissioned by Lithium Finds Great Customer Experience Means More to Consumers than Great Products

What makes customers happy? And what’s a happy customer worth? Eighty-three percent of U.S. consumers say having a positive customer experience with a brand is more important than the product itself, a new study by Harris Poll of 2,000 respondents reveals. Consumers are willing to spend one-third of their disposable income – $100 per month on average – with brands they love based on a great customer experience. That’s around $31 billion up for grabs every month to brands who make their customers happy.

Experience Over Product

Brands work relentlessly on product design and features, but today’s consumer increasingly values how a brand treats them as more important than the product they sell. The Lithium-commissioned study found 43 percent of consumers would actually buy an inferior product from a brand that they had a great experience with, and 73 percent will spend more on a product if it is from a brand they love. But this works both ways, with 71 percent of consumers unlikely to ever use a brand again after only one bad experience. Worse, 44 percent would share their negative experience with friends and family, potentially leading to even more customers fleeing.

Value of A Happy Customer

The following Lithium infographic summarizes the major findings and insights from the Harris Poll:

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And checkout what people on the street had to say about what a great experience with a brand meant to them:

“Customers’ increasingly high expectations of brands have reached a critical point. When two-thirds of consumers say they are unwilling to stick with a brand that has treated them badly even if they love the brand’s products, it’s time to sit up and take notice. Brands need to dig deeper to understand how they can create awesome experiences for their customers across platforms.”

What’s A Brand To Do?

Brands can no longer dictate terms. They must connect with the customer in the channel of their choice, which is increasingly digital. The study reveals 29 percent of consumers prefer to engage with a brand via its website/blog/social channels, compared to 17 percent who prefer in-store engagement, and 16 percent who prefer to connect over email.

Tarkoff said.

“This study shows that as consumers reach out on digital channels, they are highly sensitive to how and when brands respond to them. It’s a wakeup call for brands to realize that providing great experiences on digital is the surest path to attracting and retaining happy customers.”

Path To Happy Customers

Harris Poll, on behalf of Lithium, conducted the “Value of a Happy Customer” survey of over 3,000 adults in the United States and the United Kingdom to help us understand what it really takes to make customers happy today.

Here are a few of the highlights:

86% of adults in the U.S. and 74% of adults in the U.K. say they are willing to spend more on products and services from a brand they love.

71% of adults in the U.S. and 64% of adults in the U.K. would share a positive experience with other consumers

After one bad experience, 71% of adults say they would likely never use that brand again.

55% of adults admit they place more value on a positive experience with a brand than on the product purchased.

Key findings from this survey include:

An Emotional Connection Matters - People tend to have love/hate relationships with brands. Savvy brands today understand that creating an emotional connection with customers is the best way to keep them in the “love” zone. The majority of adults surveyed said that they would be likely to spend more on products and services from a brand that makes them happy (80%), a brand they love (80%), and a brand to which they are loyal (80%). The message is clear: when a brand is able to create an emotional connection with consumers, a stronger sense of loyalty results.

A Digital First Mindset - When consumers need to search for something specific, they flock to digital – especially via their mobiles phones – to do it. The same can be said about how consumers engage with brands. A brand’s website, blog, or social channels are typically the first stop when searching for information about products and services. About one-third of adults say they are likely to spend more on products and services from a brand that communicates with them (32%) and shares entertaining and engaging content with them (31%) via social media.

No Such Thing as Second Chances - As consumer expectations become increasingly intense, brands have got only one shot to make a good first impression. Otherwise, customers will gladly move on. They no longer have to tolerate a bad brand experience. Over 8 in 10 adults (83%) say they would stop using a brand after one bad experience while nearly 9 out of 10 adults (87%) agree that they would look elsewhere if a brand made them unhappy in any way.

COMMENTARY: In-store shopping beats the e-commerce experience across numerous customer service and relationship measures, while online shopping wins for research and pricing, according to the results of a survey of consumers who have used their mobile devices to shop. The survey, conducted by Dimensional Research and sponsored by Wanderful Media, identified several shopping-related activities and asked respondents whether they thought those experiences were better in-store or online.

Respondents more often chose the in-store option for measures such as a great customer service (40% vs. 16%), having their questions answered (50% vs. 13%), and establishing a relationship with the merchant (51% vs. 12%).

The biggest gap in favorability, though, was for the ease of making a return (64% in-store vs. 12% online). Frustrations with the return experience certainly appear to plague online shoppers, per results from aShopRunner survey conducted by Harris Interactive. About 7 in 10 online shoppers surveyed feel that returning items purchased online is a complicated process, while an even greater proportion (81%) said they are not likely to make additional purchases from websites that charge shipping on returns.

Online Shopping Makes the Grade for Research, Savings

Further details from the Wanderful Media survey suggest that consumers who use mobile devices to shop may favor the customer experience in-store, but they prefer the research and savings possibilities offered online. The online shopping experience was overwhelming favored for the breadth of information available to research purchases (71% vs. 12%), the ease of finding a specific item (59% vs. 14%), and getting the best price (57% vs. 11%), among others.

Store Browsing Leads to Impulse Purchases

Notably, respondents were far more likely to favor the online path for discovering a previously unknown product (40% vs. 16%). Still, more respondents had made an impulse purchase in the last month in a store than had done so online (74% vs. 65%), suggesting that while they find new products online, they’re more likely to try something new while shopping in a store.

In fact, browsing in a store (60%) was the leading driver of impulse purchases among respondents, ahead of email promotions (42%) and window shopping (36%). Interestingly, newspaper circulars (23%) influenced more shoppers than social media channels such as Facebook (22%), Twitter (13%) and Pinterest (13%).

9 in 10 Have Visited a Store Due to An Online Experience

Of the shoppers surveyed, the vast majority (91%) said that something they have done online has spurred them to visit a store. Emails held the biggest sway: 60% said they had visited a store after receiving an email about a special price or promotion. Close behind, finding a coupon (59%), seeing an online ad for a sale (56%), searching for a product and finding a store location (55%), and browsing an online circular (52%) also did the trick for a majority.

Other Findings:

Of various factors that may contribute to a positive experience when shopping in-store, respondents named the absence of shipping charges (64% citing as “very important”), the ease of making a return (60%), the ability to touch, smell, and see the item to be purchased (55%), and getting the item immediately (55%) as the most important.

To get the most positive online shopping experience, respondents were most likely to say that the ability to compare prices from a broad range of sources (63% citing as “very important”), the depth of information to research purchases (59%), and the ability to stay home to shop (54%) were very important.

About the Data: The Wanderful Media data is based on an online survey conducted in December 2012 of 1027 consumers. All participants live in the United States and use a mobile device for shopping. 62% of respondents are female and a plurality (40%) are aged 36-50.

The ShopRunner survey was conducted online within the United States by Harris Interactive from December 7-11, 2012 among 3,036 adults ages 18 and older. This online survey is not based on a probability sample and, therefore, no estimate of theoretical sampling error can be calculated.

04/04/2017

Mark Twain wrote, “The problem isn’t the things that we don’t know; it’s the things we ‘know’ that ain’t so.” His comment is simply a reflection of a common-sense reality. Today, marketing and selling draw on a lot of things “we ‘know’ that ain’t so.”

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For instance: Marketers once “knew” (and many still do) that people 50 and older rarely change brands. Everybody “knew” that once consumers settled in on a brand or a company, they became more resistant to switching to another brand or business as they got older. Research shows that to be wrong. We also learned that consumer behavior is pertinent to the subtleties of marketing, advertising, and sales practices. Here is some of what we’ve learned:

As we age, our individualism increases - Baby Boomers are less subject to peer influence than are younger consumers. Marketing Implication:Keeping up with the Joneses is not as important as it once was; thus, advertising that invokes social status benefits does not play as well in Baby Boomer markets as it does in younger ones. Largely freed from worrying about reactions of others, Baby Boomers tend toward greater practicality in buying decisions than younger consumers.

We develop an Increased demand for facts - Baby Boomers tend to be less responsive to sweeping claims in marketing messages as they age. Marketing Implication:Hyperbole turns them off. If Baby Boomers are interested in considering a purchase, they want unadorned facts. Years of buying equip them with knowledge of what to look for and what information they need for an intelligent purchase. However, they often don’t get to the point of asking for facts until a product has emotionally intrigued them.

Our response to emotional stimuli increases- Baby Boomers tend to be quicker than younger consumers to reflect a lack of interest in or negative reaction to an offered product that doesn’t make an emotional connection. Marketing Implication:Such “first impressions” are more likely to be permanent than among younger people, who are more apt to give a marketer a second chance. On the other hand, you can embed a positive first impression especially deep in the emotions of the Baby Boomer — so much so that he or she is often more disposed to be a loyal customer than the younger consumer.

We become less self-oriented, more altruistic- Baby Boomers tend to show increased response to marketing appeals reflecting altruistic values. Marketing Implication:This tracks with shared middle-age shifts toward stronger spiritual values in which concern for others increases. As their altruistic motivations grow and become more powerful, narcissistic and materialistic values wane in influence. Marketers to Baby Boomers must rethink their traditional egocentric appeals in marketing communications.

As we age, we spend more time in making purchase decisions - People experience changes in their perceptions of time, and also the meaning and role of time in their lives as they grow older. Marketing Implication: For example, Baby Boomers often ignore time-urgency strategies in marketing — such as: “Offer good until —,” “Only three left in stock.” Generally, “time is not of the essence” is a common attitude among Baby Boomers, especially those who have retired.

We often project what seems to be contradictory behavior- Sometimes we characterize Baby Boomers as selfish and selfless, penurious and profligate, spontaneous and deliberate, and so on. These different attributes lead some to describe Baby Boomers as contradictory — or at least, confusing in their behavior. Marketing Implication:Baby Boomers are not different in their conduct; they are sensitive to the context in their behavior. For example, a Baby Boomer may use coupons in a grocery store, after which she drives off in a Mercedes.

This activity is not evidence of conflicting behavior, but an example of the rules of thriftiness applied to basics, and the rules of full value applied to discretionary expenditures. In the first case, the price is the common denominator in consumers’ interest, in the second, there is no common denominator because each person calculates the whole value in a unique manner.

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How the human brain processes information and consumer behavior is very relevant to the dynamics of marketing practices.

Here's what we've learned:

There are material differences between males and females in the architecture and functioning of their brains - This difference often leads to different responses to the same experiences. Women make greater use of right-brain functions in thinking processes, making them more subject to emotional arousal than males. However, research indicates that in later life, the gap between men and women in emotional sensitivity narrows. Men become more sensitive and depend on emotional reads of a situation to determine if it warrants further attention. Marketing Implication:Logic in product messages works better with males than females. However, this doesn’t mean qualitative differences in accuracy of perceptions because women make more efficient use of intuition, a right brain, and emotionally based function. However, once a woman experiences a favorable insight, she may become as rational in further processing a matter as a male. It’s just that her right brain is a more formidable gatekeeper to the left-brain than male brains are.

Our motivations do not originate in the conscious mind. - The conscious mind is the executive officer that, like a corporate CEO, makes decisions on needs that have been framed at lower levels. Neurologist Richard Restak states in The Brain Has a Mind of Its Own,“We have reason to doubt that full awareness of our motives may be possible.” Adds brain researcher Bernard Baars in In the Theater of the Brain, “Our inability to report intentions and expectations just reflect the fact that they are not qualitatively conscious.” Marketing Implication:Answers consumers give researchers about their motivations are often incomplete or off the mark just because people can only speculate about their motives at deepest levels of the psyche. Creators of product messages need to become more intimately familiar, than is typical, with the “hidden drivers” of consumers’ behavior that consumers, about which they have little explicit knowledge. These drivers tend to be stage-of-life specific. For example, young people have stronger outer-directed motivations relating to social status than older people. Older people’s motivations tend to be qualitatively more experiential and less materialistic than younger people’s motivations.

We use different brain sites and mental processes in answering researchers’ hypothetical questions than they use in real life situations - Research respondents tend to draw more heavily on the objective sequential reasoning of the left-brain than on the subjective emotional right brain in answering researchers’ questions. This left-brain bias is reversed in reacting to product messages and making buying decisions. Marketing Implication: We can improve research results by techniques that are more useful in defining consumers’ implicit testimonies that have not been distorted by undue influence from left-brain processing. The recent trend toward studying consumers in their natural living and shopping environments is justified by the finding that people process hypothetical information differently than they do real life information. Researchers need to make more use of indirect techniques to get behind the curtains of consciousness.

Brain development is lifelong, and how we mentally process information changes from one decade of life to the next - This finding alters how people view and connect with the external world (worldview). Language style preferences also change over time. For example, youth and young adults have a more aggressive language style than older people. Marketing Implication: Product messages will be more efficient and effective when expressed in the stage-of-life language style of the core market to which you primarily address the message.

Adolescent brains are significantly inferior to adult brains in reading facial expressions - The older people are, the more skilled they are at reading facial expressions. Marketing Implication: Product messages depicting people should reflect awareness the core audience’s ability to read facial expressions. For instance, older people’s greater sensitivity to facial expressions means that facial expressions should bear an authentic connection to the product and product message in Baby Boomer and older markets. Younger consumers will typically be more concerned with what people are doing than with what their faces are saying.

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We believe we can roughly divide Baby Boomer behavior perspectives into two approaches. The first emphasizes the objectivity of science and that the customer is considered a rational decision maker. In contrast, the subjective or emotional approach stresses the customer’s individual experience and the idea that Baby Boomer behavior is subject to multiple interpretations rather than one explanation only.

When making discretionary-purchase decisions, Baby Boomers tend to have: 1) A decreased sensitivity to price; 2) Increased sensitivity to affordability; 3) Sharply increased sensitivity to value. Marketing Implication: Older consumers have more sophisticated ways of determining value than younger consumers. Value determination by older consumers tends to be an existentialist exercise whereby they combine soul (spiritual) values as well as mind (intellect) and body (tangible) values into the value determination process. Not only does an item purchased symbolize some aspect of the consumer’s being, but the entire purchase experience can also be a projection of the consumer’s whole being. For example, a person with a passionate concern for the homeless may more likely buy a product from a company with a program benefiting the homeless. To that consumer, the product has a high Meta valuesindex, which is, an element of value unrelated to the product performance.

As we approach midlife (40+), we increasingly draw on right brain functions -They begin relying less on left-brain sequential and rational reasoning and more on emotions — a.k.a. “gut feelings” or intuition. Marketing Implication: Product messages for Baby Boomers should have more affect (emotional toning) than product messages for younger people. Younger people tend to have a stronger reasoning bias. Thus product messages generally should implicitly or explicitly promote concrete reasons for purchase.

Information entering the brain’s cortex (outer layers) is first processed mostly in the right brain - The right brain processes information as sensory images rather than as words and numbers. The left-brain focuses on figures and words. Marketing Implication: Product messages should be rich in sensory stimuli to increase customer attention. Even though the right brain can’t process words, words can create sensory images, as every storyteller knows. The older a market, the more important it is to present a product in story form.

Emotion, not reason, is the final arbiter in decision-making. - Initial responses to information entering the brain are visceral. Changes in body states (e.g., pulse, hormonal flow, saliva flow, body temperature, etc.) generate emotions. When a matter fails to create emotions, a person will not take action on it. (Brain patients who have lost their emotional abilities while retaining full powers of comprehension and reasoning cannot make advantageous decisions in which they have a personal stake in the outcome.) Marketing Implication: A cardinal rule for developing effective product messages is go with the grain of the brain or “Lead with the right; follow with the left.” The only way to get into a person’s conscious mind is via the right brain. Again, the use of sensory images is a key to getting into the right brain.

Gender tends to predispose responses to voice-overs in broadcast advertising - For example, research tells us that male voices are more knowledgeable when describing technical attributes of a product, while female voices are more knowledgeable when describing a product with references to love, relationships, and caring. Marketing Implication: Choose the voice to match the content and delivery style of a product message.

Pictures of people in motion arouse the brain more quickly than posed pictures. Marketing Implication: Avoid posed pictures like the plague. Motion conveys vitality. Posed pictures convey lifelessness. We should mostly avoid posed pictures in marketing to Baby Boomers, although when they do market to them, marketers commonly use posed photos.

Our sensitivity to price in nondiscretionary spending typically increases - As they age, many consumers develop higher economic “literacy” and skillfully apply it to get the best price — an objective not to be confused with “getting the best value.” Marketing Implication: Bargains primarily reflect cost factors while implicit in the term “value” are all attributes of the product, the purchase experience, and the expected ownership experience. In purchasing “need” items, older consumers tend to be more bargain-minded, whereas in purchasing “desire” items, they tend to be more value-minded in a holistic sense.

Research has shown that customers' final decisions are not the direct product of the reasoning process; in fact, emotions drive Baby Boomers in their purchase decisions. The reasoning process will confirm their decision, but it doesn't start there.

Your messages should resonate with the values and motivators of Baby Boomers. Although we all have core defining attributes and motivators that drive us, we manifest them differently as we move through the spring, summer, fall and winter of life. Selling to Baby Boomers is different primarily because of this shift in the manifestation of human values. Our need for autonomy, relationships, purpose, gaining knowledge/growth, rejuvenation and recreation are always with us. However, as we age, we manifest our values differently.

Each experience we have prompts the brain to create clusters of neurons (brain cells) with predisposed responses to new but similar experiences. - As the population of these dispositional clusters or Defining Attributes increases, a person becomes more habituated and reflexive in his or her responses. This activity decreases sensitivity to external influences, like advertising, making a person more autonomous. Marketing Implication: Defining Attributes are the marketer’s equivalent of “hot buttons.” The older we are, the more hot buttons we have. This change is good news and bad news for marketers. First the bad news: It’s harder to change people’s patterns after the early adult years. Now, the good news: When a marketer hits a consumer’s hot buttons, the deal is almost done. The challenge is learning what those hot buttons are. Fortunately, there is remarkable consistency in the general nature of hot buttons among people in the same season of life. Knowledge of the Defining Attributes of consumers in the fall and winter of life will guide you to connect with their hot buttons.

The initial determination of information relevance occurs unconsciously. - When a person sees an ad or a TV spot, the right brain initially determines if it has personal significance. The subsequent reasoning processes of the left-brain-only go to work on the ad after it has reached consciousness. The right brain conducts a process called information triage to reduce data flow to levels the conscious mind, with limited working memory (RAM) can handle. The primary criterion is relevance to a person’s interests. Marketing Implication: Imagine having a conversation in your office or at a social gathering when you hear your name come up in another conversation not far from you. Your brain was hearing the other conversation all along, but only when you heard your name did it see fit to alert your conscious mind to the other conversation. That’s what information triage is all about. Creating product messages that survive information triage is the biggest challenge in marketing. It has become fashionable to complain about advertising clutter. However, the clutter problem is in the brain, not on a television screen or in a magazine. When a message has relevance to a person’s interest, the right brain will take note. When we talk about having a “double take,” we acknowledge the right brain’s ability to pick up in a nanosecond something that has relevance to our interests.

Some Final Thoughts

The differences in consumer motivations and decision processes between consumers in the first and second half of life perplex many marketers who have yet to figure out how to market to older customers. The young are easier to analyze and sell. Now, with adults over the age of 45 in the majority, marketers are being compelled to figure out their values and behavior.

We’ve learned that it’s about new rules, new mindsets, and new processes. In short, it is a new, authentically customer-centric paradigm. New models challenge the mind because the mind has a natural bias toward preserving the old ways; even when old ways cease working as they once did. But when pain caused by an old paradigm’s breakdown exceeds peoples’ threshold of tolerance, they begin warming to new alternatives.

Finally, we’ve learned that today’s marketplace is unlike any before faced before. Most of its adult members are in the years when the influences of what Maslow called self-actualization begin to show up in behavior. Until the growth of 50+ customers, these forces had a little noticeable impact on the marketplace at-large. Now, however, such attributes of self-actualization oriented behavior are widely evidenced in your markets:

Relationships– more autonomous, less dependent on sources (such as advertising) in making decisions. Honesty and authenticity leading to trust are essential.

Social behavior – more individuated, less subject to “herd behavior,” less easy to pigeonhole into segments

Decision making – more emotional (as in “gut feelings” or intuition), less “rational” in decision processes.

COMMENTARY: Information on marketing to Millennials can be found virtually anywhere these days, but what about Baby Boomers? Once a prime focus of marketers’ advertising strategies, Boomers are now being overshadowed by the newer, younger, and more technologically-savvy generations like Millennials and Gen Zers. In fact, according to Nielsen, less than five percent of advertising budgets are put toward Baby Boomers nowadays. Yes, this audience may be older, but they’re also massive in size and have significant spending power, which means you shouldn’t count the Boomers out of your media plans just yet. Born between 1946 and 1964, this generation (comprised of Americans ages 50 and older) account for nearly a quarter of the total U.S. population, with 76.4 million currently existing in the United States. That’s a lot of Boomers – and potential benefit for your brand.

But that’s not the only reason why you should put Baby Boomers at the top of your media plans. They’re also:

Affluent

Have substantial buying power

Spend a good portion of their time online

In fact, digital marketing firm, Immersion Active, reports that Boomers have an annual disposable income of $2.4 trillion (or 70 percent of the nation’s disposable income) and account for $230 billion in sales of consumer packaged goods like coffee, diet soda and magazines (Nielsen). Additionally, Baby Boomers are becoming increasingly tech and internet savvy. Surprisingly, younger Boomers (ages 47 to 55) spent an average of 39.3 hours online per month in 2010, according to the Pew Internet & American Life Project. Older Boomers (ages 56 to 65) averaged only slightly less, at 36.5 hours. More significantly, over one-third of all tablet owners in the U.S. are over the age of 45, while 66 percent regularly purchase from online retailers. For marketers, this means the Baby Boomer market is very lucrative – increasing sales or gaining share with the right set of tactics.

That being said, marketing to this older and more brand loyal generation can be tricky. Getting to know and understand what drives their attitudes and behavior is the first step toward efficiently reaching and targeting them. Here is some insight to help get you started:

BOOMERS USE SOCIAL MEDIA, BUT IN A DIFFERENT WAY

Despite stereotypes, Baby Boomers aren’t living in the Stone Age when it comes to social media. Yes, the average age of a user may be young, but a large percentage of social media profiles belong to people over the age of 55 – 27 million active users to be exact! (Immersion Active). In fact, Boomers are among the fastest growing groups on social media. Younger generations prefer Instagram or Snapchat to post photos of their nights out and weekend trips, whereas Boomers are more likely to use Facebook to engage with family and friends. Other common activities Boomers partake in on social sites include following groups/organizations (55 percent), posting/watching videos (40 percent), supporting causes (26 percent), and joining groups (23 percent). Diving even deeper into the numbers, Boomers strongly prefer Facebook over Twitter: 49 percent of online Boomers have a Facebook account, while only 18 percent use Twitter. As older Boomers become less active and moveable, social media is the ideal way for them to keep in touch with family and friends. This means that developing the right social marketing strategy is crucial if you want to reach Boomers during the moments that matter to them.

OFFER REAL, RELEVANT, AND RELATABLE CONTENT

Here’s the bad news: Baby Boomers don’t trust marketers. And as this generation continues to age, their skepticism toward advertising grows. A recent study conducted by Insights in Marketing revealed that Boomer men (26 percent) and women (21 percent) are the least likely of any generation to believe what advertisers and marketers say about their products and services. But their skepticism is warranted. This generation grew up during the nascency of television, watching advertising grow from its inception to where it is today. In fact, Boomers have spent pretty much their entire lives inundated with advertisements, so they’re used to seeing marketers use tactics without strong content plans to back them up. Many Boomers have bought products in the past that didn’t live up to their own expectations or the marketing hype in terms of messaging as well as in quality. To gain Boomers’ trust, marketers must focus on offering them information that will resonate based on significance and candor, which means ads should reflect relevant, real-life situations so that consumers can relate. Communicating with Boomer consumers in a simple manner, with compelling, clear and concise content is also crucial. This will help marketers attract and retain loyal Boomers today and in the years to come.

SLOT SEARCH INTO YOUR MEDIA PLANS

Search Engine Marketing (SEM) is a Baby Boomer’s best friend. In fact, a study conducted by the DMN3 Institute, a digital and direct marketing agency, found that the top online activity of Boomers was utilizing search engines (96 percent). Likewise, the top online destination for Boomers is Google Search. When respondents in the DMN3 study were asked about actions taken as a result of performing online activities, search drastically outperformed social media and viewing online videos in getting Boomers to take action, including making a purchase. The top referral result of search engine use? Boomers looked for additional information online 82.4 percent of the time, with visits to a company website coming in at a close second (77.5 percent). More significantly, over half of Boomers who use social networking sites will visit a company website or continue their search on a search engine as a result of seeing something on social media. This just goes to show how interconnected and vital search and social are in successfully reaching the Baby Boomer audience.

No matter which marketing tactic you choose, providing content that meets Boomers’ needs for information in a thought-provoking, strategic, and timely manner is critical. Because the fact of the matter is, you’re not going to get the eyeballs, action, call, or purchase if your audience isn’t interested in you or what you have to offer. To learn even more about Baby Boomers, check out the infographic below.

04/02/2017

Situated 1,066 m (3,497 ft) above sea level in Norway, the construction of Cabin Ustaoset posed a challenge due to the lack of road access, and both helicopter and snow scooter were required to deliver materials. It was clearly worth the extra effort though, as the handsome cabin provides an amazing view that includes a lake, mountain range and large glacier.

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Cabin Ustaoset is raised slightly atop concrete pillars and has a total floorspace of 72 sq m (775 sq ft). It includes two bedrooms, one combined living room and bedroom, and two lofts, sleeping a maximum of 13 people thanks to bunk beds. There's also a kitchen and dining area and at least one bathroom.

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The decor is very clean and simple, and reminds us of other Norwegian cabins we've reported on, such as the Skåpet Mountain Lodges and Cabin Vindheim. Designer and owner Jon Danielsen Aarhus says the interior design was inspired by a gapahuk shelter, an improvised Norwegian shelter consisting of two posts with a horizontal log on top, and branches against it.

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The idea was to make full use of the natural views on offer, and to this end Aarhus installed a large glazed wall facing the best view. The glazing throughout is pretty generous though and the glass used is triple-glazed solar protective glass, to reduce solar heat gain.

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There's actually a nice backstory to Cabin Ustaoset, too. Aarhus' grandparents formerly maintained a cabin on the same spot. Materials from this old cabin were taken and reused for the new cabin's construction, including old floorboards and reclaimed wood. A small secondary cabin remains on the site, which is being used as an annex.

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The new cabin follows the same rough footprint as the old, having already proven ideal for snow distribution (no need to dig out the door in winter, for example). This also meant that the existing vegetation was not unduly disturbed. Aarhus used manual tools rather than heavy machinery to carefully lay the groundwork so as to not destroy the greenery.

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We've no word on how Cabin Ustaoset gets its power, but would guess a generator or solar power and batteries are used in such an isolated area. The project was completed in 2016, however there's still a little work left to do – Aarhus plans to use some leftover materials to use to construct an outbuilding later this year.

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COMMENTARY: Love the minimalist architectural design and decor of Cabin Ustaoset. I enjoy being in the backwoods and the use of all natural, recycled wood throughout the cabin blends well with the rustic environment of Norway. If you want to be away from it all, you gotta love this cabin. Works great for families with kids, because you can pack them ito the bunkbeds, no problem, and I just know they would love climbing the stairs to get to their beds. Would love to build something similar when I win the Lotto. LOL.